CALGARY, ALBERTA--(Marketwired - May 4, 2016) -Xtreme Drilling and Coil Services Corp. ("Xtreme", the "Company") (TSX:XDC) announce first quarter 2016 financial and operating results. It is anticipated that filing will take place on SEDAR of interim Consolidated Financial Statements as well as Management's Discussion and Analysis for the three months ended March 31, 2016 by May 6th, 2016.

Q1 2015 Highlights

(amounts in thousands of Canadian dollars, unless otherwise noted)

On April 27, 2016, Xtreme and Schlumberger signed an agreement for the sale of Xtreme's XSR Coiled Tubing Services Segment for $205,000. The agreement contemplates the sale of substantially all of the assets of the XSR segment, including the operating units and related equipment, inventory and consumables, and related patents and intellectual property, as well as customer lists and the transfer of rights under contracts held by the XSR business segment. Assets excluded from the sale include real property and land belonging to the XSR segment. Xtreme's Coiled Tubing Services Segment includes well intervention services in the United States and coiled tubing drilling in Saudi Arabia. Xtreme will be retaining its XDR Drilling Segment and its fleet of XDR rigs.

The operating units and related equipment, inventory and consumables, and related patents and intellectual property have been presented as "Assets of disposal group held for sale" on the Company's consolidated statement of financial position for the period ended March 31, 2016, in anticipation of the sale. There are no liabilities contemplated to be assumed as part of the transaction. The earnings of the Coil Services Segment for the first quarter of 2016 have been presented on the Company's consolidated statements of (loss) income as discontinued operations.

The information below is presented for both continued and discontinued operations on a combined basis for purposes of comparison with prior periods. Related amounts in the financial statements attached may differ.

Adjusted EBITDA was $9.2 million in the first quarter of 2016, down from $9.9 million in the previous quarter. Adjusted EBITDA margin as a percent of revenue increased in the first quarter of 2016 to 26.1% from 21.8% in the fourth quarter of 2015.

Revenue of $35.4 million in the first quarter of 2016, a decrease of 22 percent from $45.4 million in the previous quarter. XDR revenue decreased to $16.3 million in the first quarter of 2016, from $23.4 million in the fourth quarter of 2015. XSR revenue decreased to $19.1 in the first quarter of 2016, from $22.1 million in the fourth quarter of 2015. The decrease in revenue for the period was primarily a function of decreased operating days and utilization in the US Drilling Segment. Total operating days across the Company decreased to 894 for first quarter of 2016 as compared to 1,324 in the fourth quarter of 2015.

For the first quarter of 2016, overall revenue per operating day increased by 15% to $39,600 from the prior quarter, driven primarily by mobilization and standby revenue in India. XDR drilling revenue, less India revenue, per day decreased by 25% during the first quarter to $18,790 while XSR coiled tubing revenue per day decreased by 5% during the first quarter to $53,778.

For the first quarter of 2016, the Drilling Segment achieved utilization of 30% on 565 operating days. This was comprised of a 32% utilization rate for the 16 rig US XDR fleet, 0% for the three rig Canadian XDR fleet and 52% for the two rigs demobilizing from India. The two XDR rigs in India ceased operations in December 2015, but earned standby revenue while mobilizing back to the US.

For the first quarter of 2016, the Coil Services Segment achieved utilization of 65% on 329 operating days. This was comprised of a 98% utilization rate for the two XSR units in Saudi Arabia and a 46% utilization rate for the five actively marketed XSR units in the US. Not included in the total Coil Services utilization were four additional units that are currently idle and not marketed in the US.

The Drilling Segment (which includes US, Canada and India) operating profit decreased to $5.5 million in the first quarter of 2016 as compared to $7.5 million in the previous quarter. This was driven primarily by lower revenues in the US segment. Overall operating margin in the first quarter of 2015, increased to 33.9% in the Drilling Segment as compared to 31.9% in the previous quarter. The Coil Services Segment (which includes US and Saudi Arabia) operating profit increased to $8.3 million in the first quarter of 2016 as compared to $7.8 million in the previous quarter.

Total capital expenditures were $3.2 million during the first quarter of 2016, up from $2.8 million in the previous quarter. The increase is attributable primarily to maintenance capital expenditures. Currently the Company anticipates that 2016 capital expenditures will total $8 million and will be funded through operating cash flow.

During the first quarter the Company recognized $1.3 million in early termination revenue on take or pay contracts and $5.1 million in mobilization revenue on the two drilling rigs that moved back to the US from India. The Company also recorded $383k in severance expense during the quarter.

The Company finished the first quarter of 2016 with $96.2 million in total debt and $90.2 million in net debt (total debt less cash). The funded debt to EBITDA ratio was 1.9x and the net debt to EBITDA was to 1.8x. This is an increase from 1.7x and 1.5x respectively at year end 2015. On a US Dollar basis, in which the Company primarily borrows, the funded debt decreased $3 million USD during the first quarter of 2016 to an ending balance of $75.0 million USD.

Currently the Company has four of 21 XDR rigs earning revenue and seven of eleven XSR units operating. At the end of the quarter, the Company had approximately 675 days contracted under term contracts across the fleet.

As a result of the optionality and flexibility provided through the completion of the announced transaction, the management and Board of Xtreme will be reviewing all available strategic alternatives available to Xtreme which may include potential acquisitions, merger or combination, international growth program, sale of Xtreme or its assets, return of capital via a dividend, a substantial issuer bid or a combination thereof.

Selected Quarterly Financial Information

Three months ended

Mar 31, 2016

Dec 31, 2015

Sep 30, 2015

Jun 30, 2015

Revenue1

35,395

45,438

52,238

53,668

Adjusted EBITDA 1

9,248

9,911

15,444

15,036

Adjusted EBITDA as a percentage of Revenue1

26

%

22

%

30

%

28

%

Adjusted EBITDA per share 1 - basic ($)

0.11

0.11

0.18

0.18

Net loss1

(3,734

)

(21,728

)

(48,595

)

(776

)

Net loss per share1 - basic ($)

(0.04

)

(0.26

)

(0.59

)

(0.01

)

Capital assets1

410,985

446,417

445,591

473,030

Total assets1

458,987

512,226

528,120

567,050

Net debt1

90,242

96,123

93,389

112,133

Operating days 1

894

1,324

1,459

1,451

Utilization (percentage) - XDR

30

48

55

56

Utilization (percentage) - XSR

51

61

60

61

Utilization (percentage) - Total1

35

51

56

57

Weighted average rigs in service 1

32.0

31.0

30.0

30.0

Total rigs, end of quarter 1

32

31

31

30

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Revenue1

70,015

69,459

65,980

62,299

Adjusted EBITDA 1

20,761

18,617

18,299

19,421

Adjusted EBITDA as a percentage of Revenue1

30

%

27

%

28

%

31

%

Adjusted EBITDA per share 1 - basic ($)

0.25

0.23

0.22

0.24

Net (loss) income1

2,755

(2,258

)

853

(902

)

Net (loss) income per share1 - basic ($)

0.03

(0.03

)

0.01

(0.01

)

Capital assets1

488,300

452,974

443,304

413,296

Total assets1

592,194

547,958

536,713

513,651

Net debt1

126,869

115,520

116,768

105,358

Operating days 1

1,823

2,053

2,173

1,779

Utilization (percentage) - XDR

73

86

92

75

Utilization (percentage) - XSR

71

74

73

68

Utilization (percentage) - Total1

73

83

88

73

Weighted average rigs in service 1

30.0

28.0

28.0

28.0

Total rigs, end of quarter 1

30

29

28

28

1Results from continuing and discontinued operations

Appointment of Director

Xtreme is pleased to announce that the Board of Directors has appointed Mr. Colin Burnett, of Aberdeen, United Kingdom, to be a member of the Board of Directors. Mr. Burnett has over 20 years of Oil and Gas experience and represents Shell Technology Ventures Fund 1 B.V. on the Board. Mr. Burnett is a Chartered Accountant and has spent the last 17 years in oil and gas private equity, spending 10 years with 3i Group plc and the last 7 years as a private investor.

The Company also announces the resignation of Shell Technology Ventures previous representative Mr. Erik J. Vollebregt from the Board of Directors. The Board would like to thank Mr. Vollebregt for his dedicated service to the Company.

Total adjustments for non-cash items from continuing and discontinued operations

(3,368

)

730

Reader Advisory

This news release contains forward-looking statements ("FLS"). The use of the words "may", "believe", "could", "would", "might", "will be taken", "occur" or "be achieved" and similar expressions identify FLS. More particularly, this news release contains statements that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, utilization of drilling rigs in the Company's current and future fleet. Although Xtreme believes expectations reflected in these FLS are reasonable, readers should not place undue reliance on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause FLS not to be correct, including risks and uncertainties inherent in the Company's business.

These statements are based on certain factors and assumptions including, but not limited to: the assessment of current and projected future operations; ongoing and future strategic business alliances, negotiations and opportunities to enter new, extend or complete existing contracts; the availability and cost of financing; foreign currency exchange rates; timing and magnitude of capital expenditures; expenses and other variables affecting rig operation, modification and construction; the ability and commitment of vendors to provide rig component equipment, services and supplies, including labor, in a cost-effective and timely manner; the issuance of applied-for patents; changes in tax rates; and government regulations. Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of May 3, 2016, ultimately the assumptions may prove to be incorrect.

Forward-looking statements are also subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from management's current expectations. These factors include, but are not limited to: the cyclical nature of drilling market demand, foreign currency exchange rates, and commodity prices; access to credit and to equity markets; the availability of qualified personnel; vendor-provided rig components; and, competition for customers.

Management's assumptions considered the following: compliance with the terms of the Company's current and proposed new credit facility; ongoing access to key supplies and components required to continue operating and maintaining equipment, including fuel; continued successful performance of drilling and related equipment; expectations regarding gross margin; recruitment and retention of qualified personnel; continuation or extension of existing long-term or multi-well contracts; revenue expectations related to shorter-term drilling opportunities; willingness and ability of customers to remit amounts owing to Xtreme in accordance with normal industry practices; and management of accounts receivable in direct relation to revenue generation.

In preparing this news release, management considered the following risk factors: fluctuations in crude oil and natural gas prices, supply and demand; fluctuation in foreign currency exchange and interest rates; financial stability of Xtreme's customers; current and future applications for Xtreme's proprietary technology; competition from other drilling contractors; regulatory and economic conditions in regions where Xtreme operates; environmental constraints; changes to government legislation; international trade barriers or restrictions; and, where appropriate, global political and military events.

Financial outlook information contained in this news release about prospective results of operations, financial position or cash provided by operating activities is based on assumptions about future events, including economic conditions and proposed courses of action, and on management's assessment of relevant information currently available. Readers are cautioned such financial outlook information contained in this news release is not appropriate for purposes other than for which it is disclosed here. Readers should not place undue importance on FLS and should not rely on this information as of any other date. Except as required pursuant to applicable securities laws, Xtreme disclaims any intention, and assumes no obligation, to update publicly or revise FLS to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLS or otherwise, or to explain any material difference between subsequent actual events and such FLS.

Currently Xtreme operates two service lines: Drilling Services (XDR) and Coil Services (XSR) under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in Canada, the United States, Saudi Arabia and India. For more information about the Company, please visit www.xtremecoil.com.